Stock futures surged on Wednesday as the recovery rally continues, with the indexes quickly closing in on substantial overhead resistance. Investors were eager to recoup more of the losses on Monday. Despite the broad-based rally on Tuesday, which saw gains across all 11 sectors of the S&P 500, the sustainability of this rebound remains uncertain. LPL Financials’ chief global strategist, Quincy Krosby, cautioned that turbulent times may still lie ahead, reflecting the ongoing volatility and unpredictability in the market.
European stocks saw an uptick on Wednesday as global markets attempted to recover from Monday’s significant downturn. The regional markets have been volatile, experiencing sharp declines at the start of the week. On Tuesday, European markets opened on a positive note but later reversed course, ending the day lower amid choppy trading. This seesaw pattern reflects the ongoing uncertainty and cautious sentiment among investors as they navigate the fluctuating global market conditions.
Asia-Pacific markets experienced a positive uptick on Wednesday, buoyed by a rebound in major Wall Street indexes that ended a three-day losing streak. Investors in the region closely analyzed China’s July trade balance data, which revealed a faster-than-anticipated growth in imports. However, this optimism was tempered by the fact that exports fell short of expectations. This mixed trade data from China played a significant role in shaping market sentiment across Asia.
Claudia Sahm, chief economist at New Century Advisors, asserts that the U.S. Federal Reserve does not need to implement an emergency rate cut, despite the recent economic data falling short of expectations. Sahm’s perspective suggests confidence in the current monetary policy framework, indicating that the weaker-than-expected data does not warrant immediate intervention. This stance reflects a measured approach to economic fluctuations, emphasizing stability over reactive measures.
A recurring theme in the latest earnings reports from U.S. companies is the negative impact of the China market. Starbucks reported a significant 14% drop in same-store sales in China for the quarter ending June 30, compared to a modest 2% decline in the U.S. McDonald’s chairman and CEO, Christopher Kempczinski, highlighted the weak consumer sentiment in China during the same period. Similarly, General Mills CFO, Kofi Bruce, noted that after a strong start to the year, the quarter ending May 26 experienced a notable downturn in consumer sentiment. These reports underscore the challenges U.S. companies are facing in the Chinese market, reflecting broader economic uncertainties.
A recurring theme in the latest earnings reports from U.S. companies is the negative impact of the China market. Starbucks reported a significant 14% drop in same-store sales in China for the quarter ending June 30, compared to a modest 2% decline in the U.S. McDonald’s chairman and CEO, Christopher Kempczinski, highlighted the weak consumer sentiment in China during the same period. Similarly, General Mills CFO, Kofi Bruce, noted that after a strong start to the year, the quarter ending May 26 experienced a notable downturn in consumer sentiment. These reports underscore the challenges U.S. companies are facing in the Chinese market, reflecting broader economic uncertainties.
The vacation rental company, Airbnb, has cautioned investors about a potential slowdown in year-over-year growth for its key “Nights and Experiences” category in the upcoming quarter. The company noted a trend of shorter booking lead times globally and observed some signs of decreasing demand from U.S. guests. Despite these concerns, Airbnb reported a record-breaking 125.1 million Nights and Experiences booked in the second quarter, marking its highest result for this period. This mixed outlook highlights both the company’s recent successes and the challenges it anticipates in maintaining growth momentum.
Another day and yet another big overnight gap as the recovery rally continues but I highly recommend caution as we approach significant price and technical overhead resistance. According to JP Morgan the yen carry trade still has about 50% unwind left so avoid chasing with the fear of missing out. Remember the VIX remains very elevated so along with big gaps comes the possibly of big point whipsaws.
S&P 500 futures experienced a relief rally following the broad index’s worst day in nearly two years, triggered by a global market sell-off. Many investors see Monday’s downturn as a necessary correction in a market characterized by high valuations and record highs. However, caution remains, with some experts, like Keith Lerner, Truist’s co-chief investment officer, warning that the market may still face further challenges. Lerner noted that significant damage has been done and that the recovery process will likely be gradual.
European stocks showed a mixed performance as markets attempted to recover from Monday’s significant sell-off. Banks and tech stocks, which had been among the hardest hit, managed to regain some ground in the early hours of trading. Tech stocks maintained their upward momentum, ending the day 1.03% higher. However, bank stocks faced a slight setback, closing 0.06% lower.
Japan’s stock market experienced a remarkable surge on Tuesday, with the Nikkei index soaring by 10.23% to close at 34,675.46. This marks its largest daily gain since October 2008 and the highest spike in index points ever recorded. Similarly, the Topix index saw a significant rise, finishing the day up 9.3% at 2,434.21. Meanwhile, the Reserve Bank of Australia announced that its cash rate would remain steady at 4.35%, providing a stable outlook for the Australian economy.
Morningstar DBRS analysts have cautioned that ongoing market declines following the recent global sell-off could potentially become a “self-fulfilling prophecy,” leading to a recession. Despite banks being one of the most heavily affected sectors, the analysts believe that the impact of market volatility on banks will likely be limited. The end of last week and Monday saw global markets tumble amid growing fears of a U.S. recession. However, there were signs on Tuesday that stocks might begin to recoup some of their losses, offering a glimmer of hope amidst the uncertainty.
Aramco reported a net income of $56.3 billion for the first half of the financial year, a decrease from $62 billion during the same period last year. Despite this decline, the company reaffirmed its second-quarter base dividend of $20.3 billion and announced a performance-linked dividend of $10.8 billion to be paid in the third quarter. Meanwhile, the kingdom’s gross domestic product has contracted for four consecutive quarters, a trend economists attribute largely to oil production cuts. This financial performance and economic context highlight the challenges faced by the oil industry and the broader economy.
John Schulman, who has been instrumental in refining the models behind OpenAI’s ChatGPT chatbot, is set to join the company’s safety and security committee following the departure of two safety leaders. Schulman emphasized that OpenAI’s executives have consistently demonstrated a strong commitment to safety and security. This move underscores OpenAI’s ongoing dedication to maintaining robust safety standards and ensuring the responsible development of its AI technologies.
West Texas Intermediate (WTI) has erased most of its gains for the year, while Brent crude is now down for 2024. This downturn has been driven by weak economic data from the U.S., which has sparked a sell-off in equity markets amid growing fears of a looming recession. Additionally, ongoing economic softness in China has been unsettling oil market traders, further contributing to the decline in oil prices. This combination of factors highlights the current volatility and uncertainty in the global oil markets.
The T2122 indicator continues to show a significant short term oversold condition so a relief rally is likely, but I would not expect it zoom all the way back. With volatility so high, plan for very challenging price action with big point whipsaws. With little on the economic calendar markets will focus with much more scrutiny on earnings results. Plan carefully and have a great day.
Well, Monday was a brutal day for Bulls and a volatile day for everyone. SPY gapped down a massive 4.01%, DIA gapped down 2.97%, and QQQ gapped down a whopping 5.45%. However, the chasers got hammered as all three major index ETFs rallied hard off that open level (in a very volatile way) with SPY reaching a high at 12:30 p.m. that was up 2.31% from the open. At the same time, SPY was up 1.00% from its open and QQQ was up 4.25% from its open at 12:30 p.m. Then, all three started an afternoon wave down that lasted the rest of the day. DIA even recrossed below its opening level. This action gave us huge gap-down, white-bodied candles with large upper wicks in the SPY and QQQ. Meanwhile, DIA gave us a huge gape-down, white-bodied Spinning Top candle. QQQ also retested (and passed the test) its 200sma on the day. This all happened on much heavier-than-average volume in all three major index ETFs.
On the day, all 10 sectors were in the red with Technology (-3.02%) leading the charge lower. Meanwhile, Consumer Defensive (-2.01%) “held up better” than other sectors but clearly the losses were widespread. At the same time, SPY dropped 2.91%, DIA fell 2.60%, and QQQ dropped 2.98%. VXX spiked a massive 39.22% to close at 87.26 (the highest level it has seen since October 2023). VXX (and the underlying VIX) had the largest intraday jump ever during the session. Meanwhile, T2122 plummeted all the way down to the bottom of its oversold territory at 2.11. On the bond front, 10-year bond yields recovered to close down to 3.777% and Oil (WTI) gained 0.41% to close at $73.81 per barrel. So, Monday was a brutal day as US markets followed the rest of the world by opening with a huge gap lower. However, the whiplash was real with a strong (multi-percent) rally off the open and then whipsaw lower in the afternoon hammered the late dip buyers that chased. In short, there was pain to go around for everybody on Monday with the biggest dose reserved for Bulls that held long going into the weekend.
The major economic news scheduled for Monday included July S&P Global Services PMI, which came in a bit low at 55.0 (compared to a forecast of 56.0 but down just a bit from June’s 55.3 reading). At the same time, July S&P Global Composite PMI was 54.3 (versus a forecast of 55.0 and down just a bit from June’s 54.8 value). Later, July ISM Non-Mfg. Employment Index was much stronger than expected at 51.1 (compared to a forecast to 46.4 and a June 46.1 number). At the same time, July ISM Non-Mfg. PMI was up to 51.4 (exactly on the 51.4 forecast and well up from June’s 48.8 value). Meanwhile, July ISM Non-Mfg. Prices Index was also hotter than anticipated at 57.0 (versus a 56.0 forecast and a June 56.3 number).
In Fed speak news, Chicago Fed President Goolsbee told the NY Times said he sees the risk of waiting too long to cut rates. Goolsbee said, “You only want to be that restrictive if you think there’s fear of overheating.” He continued, “These data, to me, do not look like overheating … as you see jobs numbers come in weaker than expected but not looking yet like recession, I do think you want to be forward-looking at where the economy is headed for (in) making the decisions.” Goolsbee wanted to be clear that he did not care about the stock market and his remarks were based solely on last week’s data. He said, “The law doesn’t say anything about the stock market; it’s about the employment and it’s about price stability.” These remarks came after many analysts and talking heads began calling for “emergency rate cuts” prior to the next scheduled (September 18) FOMC meeting.
After the close, ACM, BRBR, BMRN, BCC, BWXT, CBT, CRGY, CSX, FANG, EHC, KMPR, PLTR, PRIM, O, and STRL all reported beats on both the revenue and earnings lines. Meanwhile, AHR, FG, HUN, JELD, OKE, SUM, VSTO, WMB, and YUMC missed on revenue while beating on earnings. On the other side, FNF and SPG beat on revenue while missing on earnings. However, AAN, CAR, and SPR missed on both the top and bottom lines.
In stock news, on Monday, in search of some bad headline relief, INTC announced it is in the process of getting $383 million of ASML’s newest technology “High NA” EUV tools. At the same time, IQVIA Data published research showing that LLY’s Zepbound has gained ground on NVO’s Wegovy in the lucrative GLP-1 weight-loss drug market. The report said that LLY’s drug now has about 40% of the market compared to 60% for NVO’s drug. (Some analysts see this market reaching $150 billion annually in the US by the early 2030s.) Meanwhile, Reuters reported that private candy giant Mars is considering acquiring K in order to pickup the Rice Krsipy Treat, Pringles Chips, and Pop-Tart brands. (K surged almost 20% before closing up 16.23% on the news.) At the same time, QMCO announced it will buy Cogentrix Energy from CG for roughly $3 billion.
In stock legal and governmental news, on Monday, the NHTSA said it is seeking information on a fatal TSLA Cybertruck crash in TX. This could be part of the ongoing “Full Self Driving” investigation or an unrelated issue. Later, GOOGL lost the federal antitrust case brought by the Dept. of Justice, 19 states, and the District of Columbia. The ruling found GOOGL had illegally acted to maintain its search engine monopoly by paying AAPL and others to make GOOGL the default search engine in browsers. GOOGL will undoubtedly appeal. After the close, MS announced it had received SEC requests for information about its cash balance sweep program where balances are sent to MS affiliate banks. Separately, MS said it had reached a conditional settlement to resolve a 2017 lawsuit related to the IPO of OW Bunker, which MS had underwrote.
Also after the close, a proposed class action lawsuit was filed against CRWD on behalf of air travelers who had flights delayed or canceled following the recent global IT catastrophe stemming from a CRWD update release. At the same time, NVS and VTRS were both hit with a lawsuit from the estate of a woman whose tissue samples (cells) were taken in the 1950s and continue to be used in research today. (A similar lawsuit was filed by the estate against TMO and that case was settled out of court for an undisclosed sum.) Meanwhile, GSK won the latest trial (in IL) over the claims that its discontinued heartburn drug Zantac caused cancer. (This is but one of more than 70k cases that are pending on this issue, most of them located in DE.)
Overnight, Asian markets were mixed but leaned toward the green side with some notable major rebounds. Japan (+10.23%), Taiwan (+3.38%), South Korea (+3.30%), and Malaysia (+2.47%) were the notable major moves higher. Meanwhile, Singapore (-1.39%) was the rebound laggard. In Europe, only five of the 15 bourses are in the red at midday but the rebounds are not as strong as Asia either. The CAC (-0.29%), DAX (+0.01%) and FSTE (+0.04%) lead the region, as always, on sheer volume. However, Greece (+1.72%) is the largest gainer in early afternoon trade. In the US, as of 7:30 a.m.) Futures are pointing toward a gap higher, but nowhere near as big a move as Monday’s gap down. The DIA implies a +0.67% open, the SPY is implying a +0.89% open, and the QQQ implies a +1.02% open at this hour. At the same time, 10-Year bond yields are also rebounding strongly to 3.859% and Oil (WTI) is up a quarter of a percent to $73.11 per barrel in early trading.
The major economic news scheduled for Tuesday includes the June Exports, the June Imports, and the June Trade Balance (all at 8:30 a.m.), EIA Short-Term Energy Outlook (noon), and API Weekly Crude Oil Stocks (4:30 p.m.). The major earnings reports scheduled for before the open include FOX, GOLF, AHCO, ADNT, ALIT, ATI, GBTG, AU, ARMK, ATKR, AVNT, BAX, BLMN, BR, BRKR, BLDR, CAT, CLVT, CEG, DK, DUK, EPC, ENR, EXPD, FIS, FOXA, GFS, GPRE, GXO, HSIC, H, IDXX, INGR, J, JLL, KVUE. KNF, LCII, MPC, TAP, MPLX, VYX, NVT, OGN, OC, MD, SRE, SWX, STWD, SGRY, TPX, BLD, TDG, TRMB, UBER, UWMC, VVX, VMC, WLK, KLG, YUM, and ZTS. The, after the close, AGL, ABNB, AFG, AMGN, ARKO, ASH, AIZ, CRC, CPNG, DVA, DVN, ENLC, PLUS, FTNT, GMED, GO, HY, IAC, ILMN, CART, IFF, LUMN, MASI, MOS, MRC, PR, RIVN, SVC, SKY, STE, SNEX, LRN, SU, RUN, SMCI, TOST, TSE, TRIP, VFC, and WYNN report.
In economic news later this week, on Wednesday, EIA Crude Oil Inventories and June Consumer Credit are reported. On Thursday we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, and the Fed Balance Sheet. Finally, on Friday, there are no major economic news scheduled.
So far this morning, AHCO, AU, ARMK, AVNT, BAX, BRKR, CELH, CEG, DK, DUK, GFS, KVUE, KNF, LCII, MPC, TAP, MPLX, TDG, UBER, WLK, and ZTS all reported beats on both the revenue and earnings lines. Meanwhile, BR, BLDR, CAT, CLVT, EPC, ENR, FIS, HSIC, H, INGR, J, NVT, OC, MD, STWD, TPX, and YUM missed on revenue while beating on earnings. On the other side, GXO and IDXX beat on revenue while missing on earnings. However, GOLF, ADNT, ATKR, BLMN, GPRE, VYX, and BLD missed on both the top and bottom lines.
In Fed Rate Cut Expectation news, on Friday, the Fed Fund Futures market has now moved even further than Friday. After the close Friday, 69.0% expected a half percent rate cut and 31.0% expected a quarter point cut at the September meeting. However, after Monday’s market bloodbath, only 17.0% expect a quarter-point cut while 83.0% now expect a half-percent cut in September. There are absolutely no bets that rates will remain the same or increase at the next meeting. After the November meeting, 9.4% of trades anticipate a three-quarters of a percent cut (down to a 4.5-4.75% rate), while 53.6% now expect a full percentage cut by then and 37.0% expect to have had 1.25% in cuts following the November 7 meeting.
In miscellaneous news, on Monday, the Wall Street Journal reported that mortgage financing firms Fannie Mae and Freddie Mac are set to impose stricter rules on commercial; property lenders and brokers. The new rules will require lenders to independently verify borrower’s financial information for borrowers of multi-family properties. In addition, tougher cash on hand and income source requirements will apply. Elsewhere, a Fed survey released Monday reported that US banks saw the best commercial and industrial loan demand in Q2 that had been seen in two years. This came as the percentage of banks reporting tighter C&I loan standards fell to the lowest level in two years. (In other words, banks were not tightening requirements and loan demand was up.) Meanwhile, Reuters reported that unplanned outages at both SCHW and Fidelity made the morning gap worse as nearly 20k traders were unable to access their accounts until the trading day was already underway Monday.
With that background, it looks as if the Bulls are making a move toward a tepid rebound early. All three major index ETFs gapped higher to start the premarket. (Not like Monday’s gap down, but still a decent gap up nonetheless.) However, from there we have seen indecision as SPY and QQQ have printed black-body candles with large wicks and DIA has printed a long-legged, white-body Spinning Top for the early session. The short-term trend remains clearly bearish as is the mid-term trend. However, while the bullish trend line is broken, the longer-term charts are not yet bearish. (For example, look at a Monthly chart. There is no way to call SPY, DIA, or QQQ bearish based on those monthly charts.) In terms of extension, all three major index ETFs are now well over-stretched to to downside from their T-line (8ema) and are in need of relief. At the same time, the T2122 indicator is at the bottom of its oversold range. So, the market is in need of a pause or relief bounce at the very minimum. (Just remember, the market can stay oversold longer than we can stay solvent predicting a reversal.) With regard to those 10 big dog tickers, nine of the 10 are in the green this morning with NVDA (+2.69%) leading the rebound both in terms of gain and dollar-volume traded. The bottom line is that markets are tentative and undecided…and therefore volatile…at the moment. The prudent approach is to either be very fast or very cautious in the trades you take. The Bears have momentum, but have used up a lot of their energy. It would not take too much to panic them in a short squeeze. However, it would also not take much selling to scare off those dip buyers trying to do the squeeze. Caution is the word of the day.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
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Friday was another big day for the Bears as INTC’s terrible earnings after the bell on Thursday and worst than expected July Payroll data led to another large gap down. SPY gapped down 1.37%, DIA gapped down 0.83%, and QQQ gapped down 1.98%. From there, all three major index ETFs followed through to the downside. QQQ made it to the lows of the day by 10:15 a.m. but SPY and DIA did not reach their lows until 11:30 a.m. Once they reached the lows, all three put in a series of volatile waves that were modestly bullish side of sideways. This action gave us large gap-down, black body, Spinning Top candles with in the SPY, DIA, and QQQ. QQQ had evenly-split wicks (above/below) but SPY’s wicks lean mostly to the bottom and the DIA wicks were almost exclusively on the bottom of the candle. (So much so that DIA was much like a very large Black Hammer candle.) This all happened on heavier-than-average volume in all three major index ETFs.
On the day, nine of the 10 sectors were in the red with Technology and Energy (both -2.95%) and Consumer Cyclical (-2.94%) leading very broad-based large losses among the sectors. Meanwhile, Consumer Defensive (+0.39%) was the only green sector that was 0.65% stronger than the next strongest group on the day. At the same time, SPY dropped 1.83%, DIA fell 1.47%, and QQQ dropped 2.38%. VXX spiked a massive 23.88% to close at 62.57. Meanwhile, T2122 plummeted down into the top end of its oversold territory at 18.20. On the bond front, 10-year bond yields plummeted down to close at 3.799% and Oil (WTI) dropped 3.01% to close at $74.01 per barrel. So, Friday was a day when bad news was seen as bad news. The massive bad news out of INTC on Thursday night, coupled with weak July job growth data led traders to run for the exits. However, by late morning the sellers were done for the week and dip-buyers did a little nibbling for the rest of the day.
For the week, SPY logged its third consecutive down candle losing 2.12%. Meanwhile, DIA lost 2.18% on the week on its first down week since June. At the same time, QQQ printed its fourth consecutive weekly loss by falling 3.07%.
The major economic news scheduled for Friday included July Avg. Hourly Earnings (Year-on-Year), which showed a decline in rate of increase at +3.6% (compared to a +3.7% forecast and a +3.8% June reading). On the Month-on-Month side, July Avg. Hourly Earnings also showed a slowing increase of +0.2% (versus the +0.3% forecast and June value). At the same time, July Nonfarm Payrolls showed a much lower increase than predicted at +114k (compared to a +176k forecast and June’s +179k number). On the private side, July Private Nonfarm Payrolls also showed a much smaller increase than expected at +97k (versus a +148k forecast and June’s +136k reading). Meanwhile, the July Participation Rate increased to 62.7% (compared to a forecast and June value of 62.6%). This all resulted in a July Unemployment Rate that jumped to 4.3% (versus the forecast and June reading of 4.1%). Later, June Factory Orders fell significantly to -3.3% (compares to a -2.7% forecast and May’s -0.5%).
In Fed speak news, Richmond Fed President Barkin told the NY Times Friday that the July Payrolls report showing a significant slowdown in job gains was “reasonable.” However, he seemed to dismiss talk of recession and calls for more aggressive rate cuts. Barkin said, “More significant reductions typically would be associated with an economy that feels like it’s deteriorating rapidly. And again, 114,000 jobs, while not as good as we’ve been running, on a long-term basis, is a reasonable number.” Later, Chicago Fed President Goolsbee said the Fed should move in a “steady” fashion. He said, “We never want to overreact to any one month’s numbers.” Goolsbee continued, saying, “Our absolute goal now is we want to settle at something like full employment, not blow through normal and deteriorate.”
After the close, AMC missed on both the revenue and earnings lines.
In stock news, on Friday, the China Passenger Car Assn. reported that TSLA sales rose 15.3% year-over-year in July. (This sounds good, but their Chinese competitors saw sales growth of 30% and China’s overall EV sales grew 31% year-on-year for the month.) Later, Reuters reported that DNB is exploring a potential sale, including a takeover by its largest shareholder CNNE. DNB is reportedly looking for $9 billion to include debt assumption. Meanwhile, CVX announced plans to move its headquarters from CA to TX, citing an “oil adversarial” government in CA.
At the same time, AI startup Character.ai announced that it signed a non-exclusive deal with GOOGL for the its search engine to use the Character.ai large language model. Separately, two of the startup’s founders (both former GOOGL employees) will return to working for GOOGL. On Saturday, CNBC reported that after unloading stocks recently (including half of its AAPL and more of its BAC), BRKB has raised a record $277 billion in cash.
In stock legal and governmental news, on Friday, the NHTSA upgraded and expanded its investigations into almost 1 million STLA Dodge SUVs over faulty door locks and window controls that caused fires including at least one death. Later, the FDA reported that all dosages of LLY’s weight-loss and diabetes drugs are no longer in shortage and are available nationwide. At the same time, Reuters reported that JPM is considering filing suit against the Consumer Financial Protection Bureau for its regulation of Zelle, a peer-to-peer payment network that the seven largest banks jointly own.
Overnight, Asian markets were red across the board again with some massive losses in chip-making countries in follow-through from INTC’s dismal performance last week and Japan raising rates for the first time 2008 (or more directly, the upward move of the Yen). Japan (-12.40%), South Korea (-8.77%), and Taiwan (-8.35%) were by far the biggest loses, but a couple more exchanges were down well over 4% and none of the region’s exchanges lost less than 1.5%. In Europe, we see a similar, but not as dismal, picture taking shape at midday. The CAC (-1.91%), DAX (-2.53%), and FTSE (-2.33%) lead the region lower even while small exchanges like Athens (-5.78%) are out front in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing to our markets following the rest of the world in general (unwarranted) panic. The DIA implies a -2.04% open, the SPY is implying a -3.04% open, and the QQQ implies a -4.47% open in what is sure to be another tech bloodbath day at least to start. At the same time, 10-Year bond yields are dropping again to 3.724% and Oil (WTI) is down 1.88% to $72.14 per barrel in early trading.
The major economic news scheduled for Monday include July S&P Global Services PMI and July S&P Global Composite PMI (both at 9:45 a.m.), July ISM Non-Mfg. Employment, July ISM Non-Mfg. PMI, and July ISM Non-Mfg. Prices Index (all at 10 a.m.). We also hear from Fed member Daly (5 p.m.). The major earnings reports before the open include AMR, BRKB, CG, KOS, SOHU, SAH, THS, and TSN. Then, after the close, AAN, ACM, AHR, CAR, BRBR, BMRN, BCC, BWXT, CBT, CRGY, CSX, FANG, EHC, FG, FNF, HUN, ITUB, JELD, KMPR, OKE, PLTR, O, SPG, SPR, STRL, SUM, VSTO, WMB, and YUMC report.
In economic news later this week, on Tuesday we get June Exports, June Imports, June Trade Balance, EIA Short-Term Energy Outlook, and API Weekly Crude Oil Stocks. Then Wednesday, EIA Crude Oil Inventories and June Consumer Credit are reported. On Thursday we get Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, and the Fed Balance Sheet. Finally, on Friday, there are no major economic news scheduled.
So far this morning, AMR, BRKB, THS, and TSN all reported beats on both revenue and earnings. Meanwhile, SAH missed on revenue while beating on earnings. On the other side, CG beat on revenue while missing on earnings. However, KOS missed on both the top and bottom lines.
In Fed Rate Cut Expectation news, on Friday, following the July Payrolls and June Factory Orders data, there was a market move in the probabilities of a Fed rate cut in September. In addition, the Fed Fund Futures bets are now expecting a larger cut. One week prior, 88.2% of Fed Funds Rate trades implied a quarter point cut in September, 11.5% were counting on a half percent cut, and a tiny fraction felt rates would remain where they are now. After Friday, 69.0% now expect a half percent rate cut and 31.0% expect a quarter point cut at the September meeting. For their part, major banks also changed their forecasts with BAC, BCS, C, GS, and JPM. All are now calling for a half percent cut in September, with C telling its clients they now expect half percent cuts in both September and November. Back to the Fedwatch tool look into the outlook of Fed Funds traders and looking out to the November meeting, the betting is evenly split between expecting a three-quarters percent reduction by that meeting and a full percent cut.
In miscellaneous news, on Friday, the national average 30-year fixed-rate mortgage plummeted 22 basis points to 6.4%. That was the mortgage’s lowest level since April of 2023. Elsewhere, CMCSA announced Friday that viewership for the 2024 Olympics is up and has blown past the 2021 Tokyo Games. CMCSA’s NBC Sports announced the five-day average viewership was 34 million viewers, up a whopping 79% from 2021. (However, it is worth noting that Tokyo had the lowest-rated summer Olympics viewership of modern games, in part due to pandemic issues.)
With that background, it looks as if the Bears have opened up the over-reaction elevator shaft so far in the premarket. If the market closed where it sits now, it would be the biggest 3-day loss since the lows of the Trump side of the pandemic. All three major index ETFs showed huge gaps down to start the premarket. After that gap, all three have followed through with black-bodied candles that are mostly (or all) body. We are firmly in correction territory here. The short-term trend is now clearly bearish as is the mid-term. However, while the bullish trend line is broken, the longer-term charts are not yet bearish. In terms of extension, all three major index ETFs are now well over-stretched to to downside from their T-line (8ema) and are in need of relief. At the same time, the T2122 indicator closed just into the oversold territory, but unless there is a big rebound it will end closer to the bottom of its range. So, the Bears have used up all their slack and the market is in need of a bounce or pause. However, remember the market can remain oversold or overbought longer than any of us can remain solvent predicting turns too early. With regard to those 10 big dog tickers, all 10 are hugely bearish with the market leader NVDA (-12.69%) absolutely getting destroyed and having traded $2.1 billion worth of stock so far this morning. Buckle up, it’s going to be a massive Bearish and perhaps volatile day. This is where we find out who the weak hands are and just how much guts the “dip buys” have.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
U.S. stock futures plummeted on Monday, contributing to a global market sell-off. Investors are increasingly worried that the Federal Reserve is lagging in reducing interest rates to counteract the economic slowdown. Additionally, there is a notable unwinding of the previously booming artificial intelligence trade. As a result, tech shares were among the worst performers in early trading on Monday.
European stocks experienced a sharp decline at the start of Monday’s session, driven by ongoing global volatility and concerns over a potential U.S. recession. Tech stocks initially dropped by as much as 5% before slightly recovering to trade down 3.5%. Similarly, oil and gas stocks fell by 3.94%, while banking stocks were down 3.62%. The VIX, an indicator of expected market volatility, surged to 41.65, its highest level since October 2020, reflecting the mounting recessionary fears.
The Nikkei experienced a significant 12.4% drop, marking its worst day since the infamous “Black Monday” of 1987. This sharp decline erased all the gains the index had accumulated throughout the year, pushing it into a loss position. Concurrently, the yen strengthened to its highest level against the dollar since January, with the exchange rate last recorded at 142.09. In South Korea, the Kospi index also faced a substantial fall of 8.77%, triggering circuit breakers that halted trading for 20 minutes to curb the market’s volatility.
Economic Calendar
Earnings Calendar
Notable reports for Monday before the bell include AMR, BCRX, BNTX, CG, FRPT, CRYS, SAH, SHC, THS, &TSN. After the bell include, ADUS, ADTN, ACM, AMRC, AHR, AESI, SESI, CAR, BRBR, BCC, BWXT, CBT, CSWC, CHGG, CSX, DH, FANG, EHC, WTRG, EVER, FNF, GBDC, HPK, HIMS, HUN, IIPR, JJSF, JRVR, KMPR, MTRN, MWA, NSA, NVTS, OGS, OKE, OTTR, PLTR, PLMR, PLAYA, PRIM, KWR, O< SPG, SPR, SUM, TDC, AAN, TBI, UIS, VEMO, VNOM, VSTO, VNO, WMB, YUMC, & ZI.
News & Technicals’
Berkshire Hathaway’s cash reserves surged to an unprecedented $276.9 billion last quarter, driven by Warren Buffett’s substantial divestment in stock holdings, including Apple. This marked a significant increase from the previous record of $189 billion set in the first quarter of 2024. The notable rise in cash hoard occurred after the Oracle of Omaha sold nearly half of his stake in the Tim Cook-led tech giant during the second quarter.
Treasury yields fell on Monday as investors sought refuge in traditionally safer assets amid a global stock market sell-off driven by fears of a looming U.S. recession. Early this morning, the yield on the 10-year Treasury dropped by 5 basis points to 3.744%, reaching its lowest level since July 2023. Meanwhile, the 2-year Treasury yield decreased by more than 9 basis points, settling at 3.772%.
The yen exchange rate has emerged as a key driver of global markets, according to financial historian Russell Napier. In a recent installment of his “Solid Ground” macro strategy report, Napier, co-founder of the investment research portal ERIC, highlighted how changes in Japanese monetary policy can significantly impact U.S. financial markets. His observations come at a time when many market participants have been surprised by the rapid rally of the yen.
UBS has issued a cautionary note about investing in Japan, likening it to “catching a falling knife.” According to Kelvin Tay of UBS, the primary reason for the strong performance of the Japanese market over the past two years has been the significant weakness of the Japanese yen. While Tay acknowledged that corporate restructuring efforts by the Tokyo Stock Exchange have contributed to some market gains, he emphasized that the main driver has been the yen’s depreciation.
As the global market sell-off intensifies try not to panic. Focus carefully on your trading plan and rules. Expect massive price volatility with wide bid/ask spreads with options prices jumping due to with will implied volatility change. This will pass and there will eventually be a relief rally but be very thoughtful avoiding revenge or shooting from the hip trading because the whipsaws can very punishing. Plan carefully and remember CASH is a position!
The Bears got their revenge Thursday. SPY gapped up 0.39%, DIA gapped up 0.34%, and QQQ opened 0.15% higher on good premarket data. At that point, all three major index ETFs saw follow through to the upside, reaching the highs of the day after 30 minutes. However, then some bad data hit and the Bears sprung their Bull Trap as all three sold off sharply until 3 p.m. This was only broken by a profit-taking rally the last hour. This action gave us large, black-bodied, Bearish Engulfing candles (with wicks on both ends), that crossed below the T-line (8ema) in all three major index ETF. This happened on heavier-than-average volume in the SPY, DIA, and QQQ.
On the day, seven of the 10 sectors were in the red with Technology (-3.07%) out in front of Consumer Cyclicals (-2.45%) and the rest of the sectors. Meanwhile, the safe haven Utilities (+1.09%) was far ahead of Consumer Defensive (+0.42%) holding up better than the other sectors. At the same time, SPY fell 1.42%, DIA fell 1.29%, and QQQ fell 2.42%. VXX spiked 9.21% to close at 50.51. Meanwhile, T2122 plummeted down below the center of the mid-range at 44.94. On the bond front, 10-year bond yields dropped below the key 4% level to close at 3.979% and Oil (WTI) fell 1.32% to close at $76.87 per barrel. So, the Bears got their revenge on Thursday. Pretty good data in the premarket quickly gave way to fear about Friday’s data. However, bad data at 10 a.m. led to a strong selloff until 3 p.m. across the market as sentiment turned sharply. Still, those pesky Bulls stepped in to buy the dip at 3 p.m. and close all three major index ETFs well up off their lows. SPY climbed back up above the potential support level from the end of June, while DIA and QQQ managed to climb back on top of potential support from May highs.
The major economic news scheduled for Thursday includes the Weekly Initial Jobless Claims were higher than expected at 249k (compared to a forecast of 236k and the prior week’s 235k). On the ongoing front, Weekly Continuing Jobless Claims were also higher than anticipated at 1,877k (versus a 1,860k forecast and the prior week’s 1,844k value). At the same time, Preliminary Q2 Nonfarm Productivity was up sharply and was significantly better than predicted at +2.3% (compared to a +1.7% forecast and the Q1 reading of +0.4%). Mostly, this was probably due to a much lower than expected Preliminary Q2 Unit Labor Cost of +0.9% (compared to an estimated +1.8% and far down from Q1’s +3.8%). Later, July S&P Global Mfg. PMI was down, but not a tick better than predictions at 49.6 (versus a 49.5 forecast and a June reading of 51.6). A few minutes later, June Construction Spending was slightly improved but nowhere as strong as predicted at -0.3% (compared to a +0.2% forecast and the May -0.4% value). At the same time, July ISM Mfg. Employment Index was down to 43.4 (versus the expected 49.0 and the June 49.3 reading). On the PMI side, the July ISM Mfg. PMI was also a bit low at 46.8 (compared to a 48.4 forecast and a June 48.5 value). To top that off, the July ISM Mfg. Prices Index was up to 52.9 (versus a 51.9 forecast and a June 52.1 value). Finally, after the close, the Fed Balance Sheet showed a $27 billion reduction for the week, down to $7.178 trillion from the prior week’s $7.205 trillion.
After the close, ALHC, AAPL, ACA, TEAM, BZH, BKNG, BFAM, ED, DORM, GEN, GDDY, ICFI, LEG, MELI, MTD, MCHP, MSI, NXT, ZEUS, PKIUF, RGA, RMD, RNG, RKT, ROKU, SPNT, TWLO, X, and VTR all reported beats on both the revenue and earnings lines. Meanwhile, AES, AMZN, AEE, BIO, SQ, CLX, COIN, DKNG, EOG, FND, MATX, MTZ, POST, RYAN, SNAP, and SWN missed on revenue while beating on earnings. On the other side, AL, CC, DASH, LNT, OPEN, PRU, SEM, and VRTX beat on revenue while missing on earnings. However, BECN, CE, CIVI, CTRA, HUBG, INTC, OTEX, OEC, TPC, TROX, and WSC missed on both the top and bottom lines.
In stock news, on Thursday, Chinese electric vehicle makers NIO, XPEV, and LI reported July delivery figures. NIO reported a 43.9% increase compared to July 2023, XPEV reported a fifth consecutive month of growth in deliveries, and LI set a new monthly record (which was a 49.4% increase over July 2023). This seemed to show an improvement in the lower-priced Chinese EV market. Later, Reuters reported that BNPQY (BNP Paribas) is in exclusive talks to buy French insurer AXA’s Investment unit for $5.50 billion. At the same time, OXY announced it has closed the $12 billion deal to acquire CrownRock. In the announcement, OXY said Columbia’s Ecopetrol will not buy a stake in the shale oil producer (the two were in talks for such a stake in order to appease regulators as of July according to a regulatory filing).
Elsewhere, Reuters reported that GM is changing the performance rating system for salaried workers. The new plan will put pressure on lower-performers to improve or leave while rewarding the top 5% with 150% bonuses. (GM has 53,000 salaried employees.) Meanwhile, LLY told Reuters it expects the shortage of its blockbuster (and very profitable) weight-loss drug Mounjaro to end “very soon.” LLY CEO Ricks said “I think actually today or tomorrow we plan to exit that (shortage) process.” After the close, INTC announced it will cut 15% of its workforce (or about 15,000 employees) and eliminate its Q4 dividend as well as reducing capital expenditures. This came after worse than expected results (a 1% decline in revenue and a swing to a $1,61 billion loss for Q2) and a lowering of forecast. Also after the close, WBA announced it had sold another $1.1 billion of its stake in COR. (WBA still as a 10% stake in COR.)
In stock legal and governmental news, on Thursday, CNBC reported that Elliott Mgmt. had offered a settlement (of its shareholder lawsuit) to SBUX that would expand the board and allow CEO Narasimhan to keep his job. At the same time, the Dept. of Transportation proposed a rule barring airlines from charging additional fees to seat families with young children together. Later, AAPL asked a US District Judge to throw out the antitrust suit brought by the Dept. of Justice and 19 states (plus the District of Columbia) AGs. Interestingly, the AAPL motion was not on legal grounds. Instead, AAPL argued that if the case succeeds, the court would have to redesign its iPhones and the court does not have the expertise to do so. At the same time, WFC made a filing saying it is under investigation over money laundering and facilitating violation of US sanctions by the Justice Dept. Separately, Reuters reported WFC is also in talks with the SEC in an attempt to resolve a “cash sweep options” violation investigation. After the close, Politico reported that the US Dept. of Justice is investigating the NVDA acquisition of AI startup Run.ai over antitrust concerns.
Overnight, Asian markets were red across the board as Asia reacts to unprecedented (for at least decades) changes in Japanese monetary policy (including spending $37 billion in July to prop up the Yen and caused the Yen to rise a massive 8% against the Dollar since the July 4 holiday). The other factor was INTC’s brutal earnings, which was read-through to Japanese, Taiwanese, and South Korean chipmakers. As a result, Japan (-5.81%), Taiwan (-4.43%), and South Korea (-3.65%) led the region lower Friday. In Europe, we see the same picture (with far less magnitude) taking shape at midday. All 15 bourses are in the red as the DAX (-1.61%), CAC (-0.81%), and FTSE (-0.40%) lead the region lower in early afternoon trade. In the US, as of 7:30 a.m., the Bears are looking to follow up Thursday’s drubbing with a gap lower to start the day. The DIA implies a -0.84% open, the SPY is implying a -1.04% open, and the QQQ implies a -1.58% open at this hour. At the same time, 10-Year bond yields are down to 3.939% and Oil (WTI) is flat at $76.37 per barrel in early trading.
The major economic news scheduled for Friday include July Avg. Hourly Earnings, July Nonfarm Payrolls, July Private Nonfarm Payrolls, July Participation Rate, and the July Unemployment Rate (all at 8:30 a.m.), and Jun Factory Orders (10 a.m.). The major earnings reports before the open include ARCB, ARES, ABG, BSAC, BERY, BTSG, BEPC, BEP, CBOE, GTLS, CVX, CHD, CNK, ENB, ESAB, XOM, FLR, FYBR, IMO, LIN, LYB, MGA, NMRK, OMI, PRGO, PAA, PAGP, PPL, TIXT, and USM. Then, after the close, AMC reports.
In miscellaneous news, on Thursday the Bank of England cut rates a quarter percent from a 16-year high down to 5%. Meanwhile, the EPA issued an emergency waiver lasting until August 20 for refineries located in MI, WI, IN, and IL. The waiver suspends anti-smog rules that required refineries to make more difficult (and expensive) “summer blend” gasoline rather than the easier, cheaper, “winter blend.” This came after storm damage (power outages) shut down refineries in that region on July 15, which will not be able to restart until mid-August. Elsewhere, Freddie Mac announced that the national average 30-year, fixed-rate mortgage fell to the lowest level since February at 6.73% this week.
In geopolitical news, Russia has sent units of their Wagner PMC to Venezuela to help strongman Maduro survive massive national protests, by helping crush demonstrators, following Maduro’s theft of the country’s election last Sunday. Maduro himself has turned to his hand-picked Venezuelan Supreme Court for the moral authority to persuade the military to put down the protests against his election theft. Elsewhere, Hezbollah confirmed the death of its most senior military commander. (Israel had claimed they had killed him Wednesday, but it took a day to confirm due to the amount of wreckage of five collapsed floors of the building Israeli missile struck in Beirut.) In related news, Hamas political leader (and chief negotiator) Haniyeh was buried in Qatar. At the same time, Iran vowed revenge for the missile strike on its soil which killed him. Finally, the massive prisoner swap between Russia (and their corrupt puppet courts) and the West took place. The Biden Administration, Germany, Poland, and Slovenia had been working together to negotiate the historic deal for months. 24 detainees from seven countries were exchanged in Turkey, including 15 released by Russia, 1 released by Belarus (read Russia), and 8 convicts exchanged to Russia for those people.
So far this morning, ASIX, CHD, CRARY, ESAB, XOM, LYB, TIGO, and OMI all reported beats on both the revenue and earnings lines. Meanwhile, BERY, FLR, LIN, PRGO, and TU missed on revenue while beating on earnings. On the other side, ARCB, BTSG, BEP, ENB, and FYBR beat on revenue while missing on earnings. However, ABG, GTLS, CVX, MGA, and TIXT missed on both the top and bottom lines.
With that background, it looks as if the Bears are in control this morning with all three major index ETFs gapping down to start the premarket. After that cap, all three have followed through with black-bodied candles that are mostly body. It is worth noting that all three also gapped down through their T-line (8ema). In short, the awful INTC report after yesterday’s close has global markets scared. Still, SPY (about 5% below) and DIA (about 3.5% below) remain not terribly far below their all-time highs. However, QQQ is now in correction territory, more than 11% below its own all-time high. So, on the big moves from Thursday and premarket, the short-term trend is now clearly bearish as is the mid-term. The longer-term remains bullish. In terms of extension, QQQ is getting stretched below its T-line (8ema) but the other two remain within a reasonable distance below. At the same time, the T2122 indicator is back in the bottom half of its mid-range and likely headed lower on the now expected gap lower at the open. So, there is still room to run either direction, but the Bears have momentum off those INTC earnings and news. With regard to those 10 big dog tickers, nine of the 10 are in the red, led by INTC’s massive 22.38% selloff. AMD (+0.71%) is the only one in the green because INTC’s report showed that it was eating Intel’s lunch. However, NVDA (-4.07%) is reacting in sympathy to INTC and has traded more than 3.5 times as much dollar-volume than any other stock in premarket. The bottom line is beware of the Bear, watch for July Payrolls volatility, and prepare your account for the weekend.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
Hit and Run Candlesticks / Road To Wealth Youtube videos
Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.
DISCLAIMER: Investing / Trading involves significant financial risk and is not suitable for everyone. No communication from Hit and Run Candlesticks Inc, its affiliates or representatives is not financial or trading advice. All information provided by Hit and Run Candlesticks Inc, its affiliates and representatives are intended for educational purposes only. You are advised to test any new trading approach before implementing it. Past performance does not guarantee future results. Terms of Service
Despite Federal Reserve Chair Jerome Powell’s efforts to keep the Fed’s options open, the market is largely anticipating the start of a rate-cutting cycle in September. Stock futures rose on Thursday as investors evaluated the latest corporate earnings reports. Investors are also bracing for a busy day filled with additional earnings and economic reports, which will further influence market sentiment.
European markets declined on Thursday as investors digested a series of central bank actions. The Bank of England is set to announce its latest monetary policy decision at midday London time, with market pricing slightly favoring a 25-basis point interest rate cut. However, analysts note increased uncertainty around the decision, as some voting members remain concerned about service sector inflation and wage growth.
Asian markets are evaluating business activity readings from across the region, including the Caixin purchasing managers index from China. Australia’s S&P/ASX 200 reached new all-time highs, rising 0.28% to close at 8,114.7. In contrast, Japan’s Nikkei 225 fell by 2.49%, primarily due to declines in real estate stocks and losses among heavyweight exporters as the yen strengthened.
The AI Act, a landmark regulation designed to oversee the development, use, and application of AI, has received final approval from EU member states, lawmakers, and the European Commission. Four years after its initial proposal, the law goes into effect on Thursday. The legislation employs a risk-based approach, meaning different AI applications are regulated according to the level of risk they pose to society. The AI Act’s implications extend beyond the EU, as it applies to any organization with operations or impact within the EU, making it relevant to entities worldwide.
China’s economic officials have decided against implementing additional stimulus measures for the second half of the year, opting to focus on existing policies and long-term objectives such as technological advancement. Despite achieving 5% growth in the first half of the year, a slowdown in retail sales growth to 2% in June has cast doubt on meeting the full-year growth target. While central authorities have refrained from introducing large-scale consumption vouchers, some local governments, like Lu’an City, are issuing their own vouchers to boost spending in sectors such as dining, home goods, and car purchases.
Shell reported adjusted earnings of $6.3 billion for the three-month period ending in June, surpassing analysts’ expectations of $5.9 billion as per LSEG estimates. In addition, Shell announced a $3.5 billion share buyback program to be executed over the next three months, maintaining the same pace as the previous quarter. This positive financial performance led to a 1.4% rise in the company’s London-listed shares on Thursday morning.
Carvana is anticipating a record year in 2024 for its used-car retail business. In the second quarter, the company reported a net income of $48 million, achieving a net income margin of 1.4%. Additionally, Carvana announced plans for an at-the-market stock offering valued at approximately $1 billion, involving around 35 million shares. This strategic move aims to bolster the company’s financial position and support its growth ambitions.
Hopeless of a rate-cutting cycle beginning in September inspired another big point afternoon whipsaw. Expect more challenging price action with huge number of earnings reports highlighted by the highly anticipated AAPL and AMZN after the bell.
Broader markets gapped higher to start the day Wednesday while DIA diverged. SPY gapped up 1.31%, DIA opened just 0.03% higher, gapped up a whopping 2.37%. At that point, all three major index ETFs rallied for an hour. From that point QQQ and SPY traded sideways and drifted back to their opening level by 1:30 p.m. Meanwhile, DIA continued its post-open rally until 1:30 p.m. From there, all three rallied until 3 p.m. when they rode a rollercoaster down and back up and then back down during the last hour as profit-taking kicked in. This action gave us gap-up, white-bodied Spinning Top candles in all three of those ETFs. SPY and DIA had most of their wicks on top while QQQ had more balanced wicks and larger body. SPY and QQQ also rejoined DIA above their respective T-lines (8ema). This all happened on average volume in SPY and QQQ as well as well above-average volume in the DIA.
On the day, nine of the 10 sectors were in the green with Technology (+2.93%) way out in front of Basic Materials (+1.58%) and the rest of the sectors. Meanwhile, it was Consumer Defensive (-0.09%) that was the only sector in the red (barely). At the same time, SPY gained 1.63%, DIA gained 0.27%, and QQQ gained 2.96%. VXX fell 2.36% to close at 46.25. Meanwhile, T2122 gained a fraction, remaining at the very bottom of the overbought area at 80.54. On the bond front, 10-year bond yields plummeted to 4.031% and Oil (WTI) spiked 5.02% to close at $78.47 per barrel. So, the Bears got handed the heads at the open and in the first-hour follow-through. Then the pre and during FOMC rally kicked them again. However, the profit-taking eased their pain a bit at the end of the day. Again, it was AI that led the day after AMD’s (+4.36%) great earnings Tuesday night and then the Reuter’s report that could stoke sales for NVDA (+12.81%) as the US supposedly will allow allies to ship chip-making equipment to China. In short, it was a turn-around day for SPY and QQQ while DIA continues its rally, coming within less than half a percent of its all-time high. (It is also worth noting that NVDA traded more than three times as much dollar volume than the next closest ticker in the market Wednesday.)
The major economic news scheduled for Wednesday included the July ADP Nonfarm Employment Change, which showed a much smaller increase than expected at +122k (compared to a forecasted +147k and June’s +155k). Later, the Q2 Employment Cost Index was better than anticipated at +0.9% (versus a +1.0% forecast and down significantly from the Q1 +1.2% number). Then, the July Chicago PMI was down but still a bit better than predicted at 45.3 (compared to a 44.8 forecast and the June 47.4 reading). Moments later, the June Pending Home Sales were much, much stronger than expected at +4.8% (versus a +1.4% forecast and May’s -1.9% value). On the oil front, Weekly EIA Crude Oil Inventories showed a bigger drawdown that predicted at -3.436 million barrels (compared to a -1.600-million-barrel estimate and the prior week’s -3.741-million-barrel drawdown. Later, as expected, the FOMC held rates steady.
In Fed speak news, at his FOMC Meeting press conference, Fed Chair Powell said that recent inflation data was giving the committee greater confidence that inflation is moving back toward the 2% target. Powell said, “There has been some further progress toward the Committee’s 2% objective.” He continued by saying there was a growing POSSIBILITY of a rate cut in September, saying, “there is a growing sense of confidence that you could move at the next meeting” (as long as inflation data reaffirms the current softening trend). When pressed for a rate cut commitment by reporters, Powell replied, “We have made no decisions on future meetings.”
After the close, ACHC, AFL, AEM, ALGT, ALL, ANSS, APA, ARM, AVB, CHRW, CVNA, COKE, CTSH, COMP, CTVA, CACC, EBAY, EXAS, FMC, GNW, GRBK, IR, JAZZ, KGC, LRCX, LUNMF, META, MGM, MAA, NE, CNXN, PPC, QGEN, QCOM, QDEL, RRX, RUSHA, RHP, TTEK, VICI, and WDC all reported beats on both the revenue and earnings lines. Meanwhile, AGI, BALY, BBSI, BV, CAKE, CMPR, CODI, CRBG, DLX, ES, GLF, GT, THG, HLF, HST, IEX, KD, MKL, MET, MUSA, NFG, PGRE, PK, PTC, PTVE, SON, SSRM, and TDOC missed on revenue while beating earnings. On the side, ALB, AWK, ETSY, EXPI, SCI, and TS beat on revenue while missing on earnings. However, AIG, AR, CWH, EG, VAC, MYRG, SUI, TWI, and RIG missed on both the top and bottom lines.
In stock news, on Wednesday, JBLU announced it has agreed to buy “sustainable aviation fuel” from VLO for use on NY flights. Later, Bloomberg reported that DIA is planning to eliminate around 140 jobs from its television unit (about 2% of that staff). It also plans to cut 13% of the NatGeo staff (number unknown). At the same time, Reuters reported that C has repeatedly breached a Fed rule (regulations W) that limits intercompany transactions, leading to errors in internal liquidity reporting. (No formal investigation by the Fed has been announced yet.) Later, ALB (the world’s largest lithium producer) announced another round of cost-cutting, citing tumbling lithium prices globally.
In stock legal and governmental news, on Wednesday, INTC won the London case in which its private rival R2 had sought an injunction preventing the sale of INTC chips due to patent infringement. (A similar case is pending in the US.) At the same time, MO said it had sent data to the FDA on the growth of illegal “nicotine pouches” telling the agency this is the early stage of a massive black market for vape products in the US. (MO and BTI say they have lost substantial US sales to illegal, unapproved nicotine products.) Later, DAL put a number on its losses from the CRWD-caused IT outage that caused it to cancel thousands of flights. DAL said it lost $500 million after announcing Tuesday it would take legal action against CRWD and MSFT over the disaster. Separately, CRWD shareholders filed suit against the company related to the outage, alleging the company defrauded them by concealing the inadequate state of its software quality system.
Elsewhere, UBS filed suit against BAC for $200 million over allegations stemming from the 2008 global financial crisis. The suit alleges that BAC refused to cover the cost of risky mortgages issued prior to the crisis, which Countrywide had sold as bundles and had agreed to indemnify against being poorly written or fraudulent. BAC later acquired Countrywide. Later, Russia fined GOOGL $58k for failing to restore pro-Russia disinformation YouTube channels that GOOGL had banned. At the same time, the NHTSA announced that HYMTF (Hyundai) will recall 49k vehicles over unintentional airbag deactivation or deployment. Later, Reuters reported that a TSLA vehicle that hit and killed a Seattle motorcyclist was in “Full Self-Driving” mode. The NHTSA acknowledged the incident and said it already had an investigation underway related to similar cases.
Overnight, Asian markets were mixed with half of the 12 exchanges in the red and half in the green. Japan (-2.49%) and Singapore (-1.04%) paced the losses while Taiwan (+1.99%) and New Zealand (+0.67%) led the gainers. In Europe, we see a similar mixed picture at midday with eight of the 15 bourses in the red while seven are showing green. The CAC (-0.83%), DAX (-0.68%), and FTSE (+0.29%) lead the region on volume in early afternoon trade. In the US, as of 7:30 a.m., Futures are pointing toward modest follow-through on Wednesday’s gains. The DIA implies a flat +0.05% open, the SPY is implying a +0.44% open, and the QQQ implies a +0.53% open at this hour. At the same time, 10-Year bond yields are at 4.063% and Oil (WTI) is up almost a percent to $78.63 per barrel in early trading.
The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, Preliminary Q2 Nonfarm Productivity, and Preliminary Q2 Unit Labor Costs (all at 8:30 a.m.), July S&P Global Mfg. PMI (9:45 a.m.), June Construction Spending, July ISM Mfg. Employment, July ISM Mfg. PMI, and July ISM Mfg. Prices (all at 10 a.m.) and the Fed Balance Sheet (4:30 p.m.). The major earnings reports before the open include ADT, AER, APD, ALE, ATUS, AME, BUD, HOUS, APG, APO, APTV, MT, ARW, AXTA, BALL, BHC, BCE, BDX, BDC, BIIB, OWL, CNQ, CVE, CI, CIGI, COP, CROX, CMI, D, LPG, DRVN, DNB, ETN, ETR, NVRI, EXC, RACE, AG, FTDR, GIL, HSY, HTZ, DINO, HII, NSIT, NSP, IBP, ICE, IRM, ITRI, ITT, JHG, K, KIM, KEX, KTB, LH, LAUR, LTH, LNC, LAD, MIDD, NBIX, PATK, PBF, BTU, PNW, PWR, REGN, RBLX, SABR, SNDR, SHEL, SIRI, SO, STGW, TRGP, TFX, TRI, TM, TAC, UPBD, VAL, GWW, W, WEN, WCC, XEL, and XPO. Then, after the close, AES, AL, ALHC, LNT, AMZN, AEE, AAPL, ACA, TEAM, BECN, BZH, BIO, SQ, BKNG, BFAM, CE, CGAU, CC, CIVI, CLX, COIN, ED, CTRA, DASH, DORM, DKNG, EOG, ERO, FND, GEN, GDDY, HUBG, ICFI, INTC, LEG, MTZ, MATX, MELI, MTD, MCHP, MSI, NXT, OTEX, OPEN, OEC, POST, PRU, RGA, RMD, RNG, RKT, ROKU, RYAN, SEM, SNAP, SWN, TROX, TPC, TWLO, X, VTR, VRTX, and WSC report.
In economic news later this week, on Friday, July Avg. Hourly Earnings, July Nonfarm Payrolls, July Private Nonfarm Payrolls, July Participation Rate, July Unemployment Rate, and Jun Factory Orders are reported.
In terms of earnings reports later this week, on Friday, ARCB, ARES, ABG, BSAC, BERY, BTSG, BEPC, BEP, CBOE, GTLS, CVX, CHD, CNK, ENB, ESAB, XOM, FLR, FYBR, IMO, LIN, LYB, MGA, NMRK, OMI, PRGO, PAA, PAGP, PPL, TIXT, USM, and AMC report.
So far this morning, AER, ABEV, BUD, AXTA, BIIB, BIP. CNQ, CI, CROX, DLAKY, ETN, ETR, NVRI, EXC, GCI, GEL, GIL, GVA, DINO, HII, ING, IRM, KIM, KTB, LH, LAUR, LTH, LNC, LAD, REGN, SCGLY, STGW, SCMWY, TRP, TRI, TIPT, TM, TRN, and UPBD all reported beats on both the revenue and earnings lines. Meanwhile, APD, ALE, AME, APTV, BALL, BDX, LPG, ITT, MIDD, SHEL, TFX, W, and XPO all missed on revenue while beating on earnings. On the other side, APO, CVE, NBIX, PBF, PWR, and VNT beat on revenue while missing on earnings. However, ADT, ATUS, MT, BCE, COP, HSY, SAVE, WEN, WCC, and XEL missed on both the top and bottom lines.
In miscellaneous news, on Wednesday, Reuters reported that US restrictions on the export of chipmaking equipment to China will exempt some US allies. However, later, Bloomberg reported that the US is considering new restrictions on AI memory chip sales to China. (MU is the main US supplier of such chips.) Meanwhile, billionaire Bill Ackman canceled the IPO of his Pershing Square US Closed-end fund (scheduled for Tuesday) when it became clear he would not raise nearly as much money as he had hoped.
In geopolitical news, Israel escalated and expanded its conflicts by killing the Hamas political leader (and main negotiator with Israel related to a cease fire and release of hostages) by missile strike in Iran. This raises fears of a broader regional conflict. It also helps PM Netanyahu keep the conflicts going, which ensures his continuing as PM. Elsewhere, Ukraine received the first group of F-16 fighter-bombers. These are not coming directly from the US (although LMT and GD will get significant parts and maintenance supply contracts from this transfer). However, the US will also sell F-35s (made by LMT and sub-contractor NOC) to back-fill the jets sent to Ukraine.
With that background, it looks as if the market is indecisively looking to follow-through on Wednesday’s gains. All three major index ETFs are higher. SPY and QQQ both gapped higher, traded back down, then reversed and are near the highs of the premarket at the moment. This leaves them with a lot of wick and white-bodied Hammer type candles. Meanwhile, DIA gapped down, immediately reverses and has printed a white-bodied candle with no wick, sitting at early session highs. So, the Bulls are in control in the premarket, they just did it different ways between the narrower DIA and broader SPY and QQQ ETFs. All three major index ETFs are above their T-line (8ema) and pushing higher from the previous session. This means the short-term, mid-term, and longer-term, the trends are all bullish and within a few percent of their all-time highs. In terms of extension, none of the major index ETFs are too stretched from their T-line. At the same time, the T2122 indicator is right at the bottom edge of its overbought area this morning. So, there is still room to run either direction, but it would seem like again the Bears have a little more slack with which to work. With regard to those 10 big dog tickers, seven of the 10 are in the green so far in the premarket as META (+8.12%) is the leader followed by NVDA (+2.93%) which brings heavy volume in addition to its price move. TSLA (-0.55%) is by far the laggard of the 10. So, the wind seems behind those tech big dogs this morning.
As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!
See you in the trading room.
Ed
🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.
🎯 DickCarp: the scanner paid for the year with HES-thank you
🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.
🎯 Bob S: LTA is incredible…. I use it … would not trade without it
🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade: PYPL, TGT, and ZS. Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.
🎯 Friday 6/21/19 (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.
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